Interest rate rises likely in coming months, Bank of England’s chief economist says

详细摘要

‘We have further to go,’ says Huw Pill after increase to 4% last month as Bank seeks to tackle rising inflationThe Bank of England will probably need to raise interest rates next…

‘We have further to go,’ says Huw Pill after increase to 4% last month as Bank seeks to tackle rising inflation

The Bank of England will probably need to raise interest rates next month and again in early 2027 to combat rising inflation, its chief economist has said.

Signalling a sharp rise in mortgage payments for an estimated 2.3 million homeowners who will have to refinance their loans next year, Huw Pill said that while the decision to nudge interest rates from 3.75% to 4% earlier this month was a “significant step” towards getting monetary policy into a better place, “we ⁠have further to go”.

Pill told the Financial Times: “My view would be, we will see evidence that motivates further rises,” adding that the central bank would “do ‌what is necessary to get inflation back to 2% through time”.

The chief economist is one of a number of the Bank’s policymakers who believe the UK economy has gained in strength over the last year, handing workers the power to bid up wages.

Recent figures showed the economy grew by 0.7% in the third quarter, to give an annual rate of growth that was only surpassed by the US among the G7 group of wealthy countries.

With inflation expected to rise to 5% in spring next year, driven by high oil and gas prices as a result of the Iran war, Pill expects public and private sector workers to demand substantial pay rises, which would keep inflation high for a longer period.

Pill said he considered an end to the US-Israeli ‌conflict with Iran and a fall in energy prices to be a “very low probability”, signalling to the newspaper that he was poised to vote for another ​quarter-point increase next month.

“My bias, for what it’s worth, is that I worry about the inflationary impact being magnified by second-round effects,” he said, adding that he believed the central bank should have acted sooner to combat inflation. “In my ⁠view, we waited too long.”

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